Hindustan Unilever cuts prices of soaps, detergents after 2 years of hikes

Hindustan Unilever (HUL), one of the country’s largest fast-moving consumer goods (FMCG) players, is learnt to have cut prices of its leading soaps and detergents this month by 2-19 per cent, according to the company’s distributors.

The cuts come after consistent price increases by the company as well as its peers, following the sharp rise in raw material prices in the past several months.

It is only recently that prices of raw materials have started to correct from peak levels in the June quarter. In the last four quarters, analysts said, FMCG companies have taken price increases of 8-15 per cent.

Although product prices continue to be high compared to a year ago, the latest price cuts by HUL include those of Surf Excel Liquid (to Rs 112 from Rs 115 for a 500-ml pack) and Rin detergent powder (to Rs 99 from Rs 103 for a1-kg pack).

Among others, the price of Lifebuoy soap (pack of four of 125 gm each) has been reduced from Rs 140 to Rs 132, while Dove soap (50 gm) now costs Rs 22 compared to Rs 27 earlier.

Among stock-keeping units (SKUs) for which the effective price has been cut by way of a change in grammage include Wheel green bar and Lux soap. Likewise, a Lux soap pack of four (Rs 140) is being changed into a pack of five (Rs 156). Since each soap will continue to weigh 100 gm, the effective price is down by 10.86 per cent.

"For Surf, Rin, Wheel, and Dove, the news of the price drop reported by you, is incorrect. For Lifebuoy and Lux, there has been a price drop in the West region," HUL's spokesperson said in an email response to Business Standard's query. 

One of the distributors said HUL had asked them to push more stocks into the market.

For the industry, volumes have been subdued, especially in the rural areas/smaller towns, pulling down volume growth.

Another distributor said not all price cuts had reached the market yet, but the company had communicated this to distributors. In such cases, the lower-priced products will hit the market in the next fortnight.

Godrej Consumer Products (GCPL), which competes with HUL in the soaps segment, was the first to initiate price cuts on select SKUs last month.

GCPL increased the grammage of its Godrej No.1 soap from 41 gm to 50 gm, while keeping the price unchanged at Rs 10. It also reduced the price of the bundle pack (five units of 100 gm each) of Godrej No.1 soap from Rs 140 to Rs 120.

“FMCG companies have been taking constant price increases to pass on higher raw material prices to the consumer for the past two years. Now as palm oil prices have come off from their peak, companies have started to pass on the benefit of raw material costs to drive volumes in the coming quarters,” said Sachin Bobade, vice-president, Dolat Capital.

Growth in volumes in the recent past was affected due to a significant surge in product prices.

The recent decline in palm oil prices is now being looked at as an opportunity to pass on price cuts to drive volumes growth, added Bobade. In the past six months, crude palm oil prices have declined more than 40 per cent and PFAD (palm fatty acid distillate), one of the ingredients to manufacture soap, has declined by over 50 per cent.

Some respite for consumers
 

Rin Detergent Powder

Price reduced to Rs 99 from Rs 103 for 1 kg pack (-3.88%)

Surf Excel Liquid 

Price cut to Rs 112 from Rs 115 for half-litre pack (-2.61%)

Lifebuoy soap 

Pack of 4 (125 gm each) price cut from Rs 140 to Rs 132 (-5.71%)

Lux soap 

Pack of 4 (100 gm each) price to change from Rs 140 to Rs 156 for pack of 5 soaps (100 gm each) (-10.86%)*

Dove 

50 gm soap price cut to Rs 22 from Rs 27 (-18.52%)

Wheel Green Bar 

Price of 80 gm SKU cut to Rs 5 from Rs 7 for 100 gm SKU (-10.71%)*

Note: *Effective reduction in price adjusted for change in grammage/pack size Source: Industry